Investors have settled comfortably under the hot Cypriot sun
It should be noted right away that we are talking about the Republic of Cyprus, recognized by the entire world community, including the UN, i.e., the Greek part of the island, which occupies about 60% of its territory. The Cypriot government adopted the program of issuing passports in exchange for investments in the island's economy in its current form after the 2013 financial crisis, which led to the collapse of the banking system and a severe recession.
As Expert Online notes, foreigners can now become citizens of Cyprus in less than six months. To do this, they must invest at least €2 million in the Cypriot economy or buy at least €2.5 million worth of government bonds or shares of Cypriot companies. When it comes to investments, these are most often investments in real estate or, simply put, the purchase of villas and other property in Cyprus.
In just over three years, Cyprus, according to Finance Minister Harris Georgiades, has sold about 2,000 passports. Approximately half of their holders, according to PricewaterhouseCoopers, are Russian citizens. The effect of the program is very significant – last year alone, the island received €4 billion ($4.4 billion) in foreign investment. This, by the way, is about a quarter of Cyprus's annual economic output.
The success of the Cypriot 'passport-for-investment' program has a simple explanation. Experts say that although such programs are not uncommon, the Cypriot one is among the easiest and fastest. Moreover, the dark red EU passport allows visa-free travel to 147 countries.
Many in Brussels, writes Bloomberg, are unhappy with such programs, which are not without reason called a 'back door' into the European Union. One can recall the non-binding European Parliament resolution of 2014, which stated that 'European citizenship cannot be a commodity for sale.' During its discussion, Romanian MEP Sebastian Bodu directly stated that European passports would allow wealthy Russians and Chinese with dubious reputations to move freely around the world.
Nevertheless, the Cypriot Finance Ministry in Nicosia considers the program useful. It, the government claims, helps the island emerge from a three-year recession. Currently, the Cypriot economy is considered one of the fastest-growing in the eurozone. In 2015, its growth was 1.7%, and last year it was already 2.8%. In addition, the program has a beneficial effect on the tourism business: after the crisis, the number of tourists from Russia, which was already high before 2013, increased by 65%.